Compliance December 28, 2005
IRS Puts Out Roth IRA Annuity Conversion Guidance
December 28, 2005 (PLANSPONSOR.com) - Federal tax
officials on Wednesday released additional guidance on how to
figure out the fair market value of an annuity contract that
has yet to be annuitized as part of the conversion process of
a traditional IRA to a Roth IRA.
Reported by Fred Schneyer
According to the Internal Revenue Service (IRS) Revenue Procedure 2006-13 , officials have decided upon safe harbor methods for the fair market value determination. The new IRS guidance instructs tax preparers to use the methodology provided in A-12 of §1.401(a)(9)-6 with the following modifications:
- All front-end loads and other non-recurring charges assessed in the twelve months immediately preceding the conversion must be added to the account value.
- Future distributions are not to be assumed in the determination of the actuarial present value of additional benefits.
- The exclusions provided under paragraphs (c)(1) and (c)(2) of A-12 of §1.401(a)(9)-6 are not to be taken into account.
The simplified safe harbor method provided in Section 4 of this revenue procedure is available where such a conversion occurs before January 1, 2006, the IRS said.
You Might Also Like:

Near-Retirees Flummoxed by Social Security Benefits
Respondents to a survey by MassMutual revealed certain topics they have questions about.

Employers Asked to Take Part in Meeting Americans’ Retirement Income Needs
An economic report discusses Baby Boomers’ lack of retirement readiness and how a new framework for income security is needed...

Participants Prefer Monthly Retirement Paychecks Over Flexible Withdrawals
The majority of respondents to a survey by Capital Group also noted they were potentially interested in annuity and lifetime...